19340205_Minutes.pdf

445

A meeting- of the Executive Committee of the Federal Reserve

l ard was held in Washington on Monday, February 5, 1934, at 3:45 p.m.

PRESENT: Mr. Black, GovernorMr. HamlinMr. ThamesMr. Szymczak

Mr. Morrill, SecretaryMr. Carpenter, Assistant SecretaryMr. Bethea, Assistant Secretary

The Committee considered and acted upon the following matters:

Memorandum dated February 2, 1934, from Mr. Paulger, Chief of

the Division of Examinations, referring to the authority granted at the

testin,f' on December 19, 1933, under which Mr. T. F. Furbershaw was

eraPloYed temporarily as a stenographer in the division, and recommending

that in view of the continued amount of work in the division, the

temno,'arY appointment of Mr. Furbershaw be extended for an additional

daysthixon the same terms as the previous appointment.

Telegram to Mr.Reserve

Bank of Philadelphia, reading as follows:

Ine "Your letter Tanuary 30. Board approves temporary appoint-m_nt LYnn McManus as Examiner in Federal Reserve Agent's depart-

7" Your bank at salary rate of $4,008 per annum effective uponseuming duties. Please advise effective date."

Approved.

Austin, Federal Reserve Agent at the Federal

Letter toot

Philadelphia,

%tabled in his14 the

personnelIlevi pos

itions in

tilt' salary ranges

Approved.

Mr. NbIlhenny, Cashier of the Federal Reserve Bank

stating that, in accordance with the recommendation

letter of Tanuary 29, 1934, the Board approves changes

classification plan of the bank to provide for four

various departments of the bank, and for increases in

of two positions. The letter stated also that, in

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

4162/5/34

slIbmit+4in future requests for changes in the personnel classification

13344, it Will be appreciated if the bank will indicate the necessity for

each of the changes recommended.

I,Lpproved.

Telegram dated February 3, 1934, approved by five members of the

"Board 4.

0 Stevens, Federal eserve Agent at the Federal ileserve Bank

Or 01)4-4.oago, referring to the application of the "lacomb County savings

' Lenox, Michigan, for permission to withdraw immediately from mem-bers1„4"4.1) in. the Federal Reserve System, and stating that the Board waives

BatIctt

-2-

the „lull requirement of six months' notice of intention to withdraw and

that, uoeordingly, upon surrender of the Federal reserve bank stock issued

to the lacamb County Javinrs Bank, the Federal 7eserve Bank of Chicago is

uti1°11-zed to cancel such stock and make a refund thereon.

_t.pproved.

Letter dated February 3, 1934, approved by five members of the

te O'Connor, Comptroller of the Currency, reading as follows:

toa "In accordance with your recommendation, the Federal iieserveFi I'd approves a reduction in the common capital stock of 'Theal,,st National Bank of Bloomington', Bloomington, Indiana, fromba'?,000 to :50,000, pursuant to a plan which provides that the34. 4's capital shall be increased by J23,000 Class 'A' preferred

to be sold to the P,econstruction l'inaace Corporation and:.?1000 Class 'B' preferred stock to be sold locally, and that the

Zs released by the reduction in common capital stock shall bealiu to eliminate a corresponding amount of unsatisfactory assets,

as set forth in your meliorandum of .Tanuary 24, 1934.In reviewing the information submitted in connection with the

1.sed capital reduction, it has been noted that it is apparently

c,,,asended to eliminate unsatisfactory assets totaling approximately

sur6, 00 by the application of approximately :96,000 from the bank's

A.144-‘1•18 and undivided profits in addition to the released capitalwills amounting to 90,000. If these eliminations are made there

the remain in the bank securities depreciation, as appraised byor Reconstruction Finance Corporation examiner on December 16, 1933,

is !I3P1'oximately 111,000, an amount which, if considered as a loss,eza-ufficient to eliminate the remaining surplus, undivided profits

e°m°11 capital stock and to impair the Class 'B' preferred


2/5/34-3-

447

.tock to the extent of approximately 2:31,000. There will also re-in the bank a large volume of slow loins and a heavy investment

in banking house and furniture and fixtures. It is assumed, however,that you have these conditions in mind and that whenever it isfeasible to do 30 you will obtain such further corrections as maybe

practicable."

Approved.

Letter to Tr. L:'Connor, Comptroller of the Currency, reading as

"In accordance with your recommendation, the Federal ReserveBoa rd approves a reduction in the common capital stock of 'The Farmerslational _Sank of Winfield; ilinfield, Iowa, from '50,000 to 25,000,Pursuant to a plan which provides that the bank's capital shall be?-nereased by the sale at par of 25,000 par value preferred stock

Io the Reconstruction Finance Corporation, and that the funds re-eased by the reduction in common capital shall be used to eliminatesubstandard assets and securities depreciation in the amount of

296.82 and to establish a surplus fund in the mount of 4,703.18,'LL-L as set forth in your memorandum of January 31, 1934."

Approved.

.Letter dated February 3, 1934, approved by five members of the

8°aret, t° O'Connor, Comptroller of the Currency, reading as follows:

BOa "In accordance with your recommendation, the Federal ReserverA'4 approves a reduction in the common capital stock of 'The

Tst National Bank of Waverly', Waverly, Iowa, from :100,000 to31,, pursuant to a plan which provides that the bank's capitalI:48,11 be increased by the sale at par of 50,000 par value pre-4,e_rred stock to the neconstruction Finance Corporation, and that

ZI_Ie funds released by the reduction in common capital shall be used2) eliminate unsatisfactory assets, all as set forth in your memo-l'andum of January 24, 1934."

Approved.


to --O'Connor, Comptroller of the Currency, readinF, as follows:

to "In accordance with your recommendation the Federal Reserve

approves a reduction in the common capital stock of 'Thei25Y0National Bank of Crete', Crete, Nebraska, from c50,000 to

° "00 Pursuant to a plan which provides that the bank's capital


4482/5/34

-4-

"shall be increased by the sale at par of 25,000 par value pro-stock to the econstruction Anance Corporation raid that

the funds released by the reduction in common capital shall beused to eliminate substandard assets and securities depreciation,all as set forth in your memorandum of January 26, 1934."

.Lpproved.


ue Mr. O'Connor, ,;amptroller of the Currency, readin as follows:

"Receipt is acknowledged of your memorandum of January 29,1934 With reference to the Board's letter of November 10, 1933,JProving a reduction in the common capital of The Security Na-1°,ael Bank of ..a.kansas ,Jity, Arkansas City, Kansas, and to thepeardts letter of December 27, 1933 amending its letter of lovem-Iper 10, 1933 by eliminating condition numbered three.

"In accordance with your recommendation the Board now amendsIts letter of November 10th by cha .ing the wording of conditionnumbered four

lv to read as follows:

4. That none of the funds released by the capital reductionshall be returned to the shareholders, but that suchfunds in the amount of 50,000 together with funds inthe amount of approximately :10,661.81 to be made avail-able by voluntary contribution shall be credited to un-divided profits and immediately thereafter substandardassets in a like amount shall be charged off; and thatthe party or parties who shall contribute to the bankl0,661.81 or approximately this amount may receiveeliminated assets in return therefor, such assets to bedetermined by the agency manager of the reconstructionFinance Corporation."

Approved.

Telegram dated February 3, 1934, approved by five members of

the 13°4rd, to Mr. Case, Federal Reserve Agent at the Federal Reserve

411k (pf ilew York, stating that the Board has considered the applica-tio4 or

nhe "Associates of Lorris County, Inc.", 1,1orristown, New jersey,tor

a 7°tin.C.:: permit under authority of section 5144 of the RevisedZta,t4tes of

the United States, as amended, entitling such organizationto irate the

stock which it owns

111 11°ckaviziy,,,

or controls in the "First National Bank

Rockaway, New Jersey, and has authorized the issuance


2/5/34-5-

°r a limited permit to the applicant, subject to the following condi-

"Prior to the issuance of the limited voting permit herebyauthorized applicant shall agree

"(1) That within such time as shall be fixed by the Federalreserve Agent at the Federal Reserve Bank of New York theundersirmed will cause First National Bank in Rockaway torehabilitate its capital structure by voluntary contributions,issuance of common stock and/or preferred stock, or otherwise,in such amount and in accordance with such plan or plans asshall be approved by the Comptroller of the Currency and shallbe satisfactory to tho7edera1 eserve Agent at the FederalReserve Bank of New York and to cause such bank to charge offor otherwise eliminate (a) estimated losses in loans and dis-counts, (b) depreciation in stocks and defaulted securities,(c) depreciation in securities not of the four highest gradesas classified by an invesLment service organization regularlyengaged in the business of rating or grading securities,and (d) all other losses, such charge-offs or eliminations tobe based on current examinations or credit investigations andto be of such nature and extent, and in accordance with suchplan or plans for the rehabilitation of such bank, as shallbe satisfactory to the Camptroller of the Currency and to theFederal eserve Agent at the Federal Reserve Bank of New York,

"(2) That all assets of such bank which may be charged offor otherwise eliminated pursuant to the foregoing clause num-bered (1) of this agreement will remain the property of suchbank and will not be distributed to the shareholders of theundersigned or of such bank or otherwise released in any man-ner whatsoever;

"(3) That the undersigned will cause its subsidiary bank tomake such corrections as shall be requested by the Federal Re-see ;gent at the Federal Reserve Bank of New York in order toremove the cause of any criticism relating to any feature ofits practices, policies, management, or financial conditionWhich has been made by the appropriate supervisory authorities."

ror the following purposes:

ad. At any meeting of shareholders of such bank, or at anya,J°11111mont thereof, at any time prior to :Lay 1, 1934, to electE;eu directors as may be satisfactory to the Chief National Bank1,eriner for the L,econd 'Federal Reserve District and to the Federalt _elvve 4ent at the Federal Reserve Bank of 1:ew York, and to act111':'1'eat, upon such matters as are ordinarily acted upon at the annual

et-LnCs of such bank.or "2* At any time prior to :.:ay 1, 1934, to act upon a proposal

ProPosals to authorize and effect an increase in the capital


4502/5/34

"fUnds of such bank and to do all thins necessary for such purpose,Provided that such proposal or proposals shall be in accordance witha. Plan which shall be approved by the appropriate supervisory author-

and shall be satisfactory to the Federal Pteserve At_:ent at theIederal ileserve Bank of New York."

The teleram also authorized the agent to have prepared by counsel for

the Federal reserve bank, and to issue to the Associates of Norris County,

IAc., a limited voting permit in accordance with the telegram when the

corldition prescribed therein has been complied with.

Board,

Of

°r the

permit

Ulaited

Approved.

Telegram dated February 3, 1934, approved by five members of the

to Er. Newton, Federal Reserve Agent at the Federal Reserve Bank

'Francisco, statin: that the Board has considered the application

"Old National Corporation", Spokane, 1ashington, for a votini

under authority of section A./A- of the :evised :Statutes of the

zAates, as amended, entitling such organization to vote the stock

Villeh it owns

or spol,,

Spokane, Washington, and has authorized the issuance of a

Permit to the applicant, subject to the following condition:

m, "Simultaneously with the issuance of the limited voting per--Lt hereby authorized there shall be issued to Investment and

')ecurities Co., Spokane, Washington, the limited voting permiteuthorizeu in the i3oard's telegram to you of this date."'111(1 fol. the followin purposes:

To act upon a proposal or proposals to reduce the commonpiPltal stock of such bnnk from ;000,000 to $250,000 pursuant to a

vhich shall be approved by the Comptroller of the Currency andbyleh shall provide, among other things, that the funds released0,Uchi reduction in comon capital stock, together with a portion4hthe

bank's undivided profits, shall be used to charge of-1' or

azde"iso eliminate approximately ::277,000 of undesirable assets°f depreciation in securities.

or controls in "The First National Trust and Savings Bank


2/5/34I) -7.-

"2. To act upon a proposal or proposals to authorize thecreation and issuance of common and/or preferred stock of suchbank in such amount and in accordance with such plan or plans asshall be approved by the Comptroller of the Currency and shall besatisfactory to the :Federal Reserve .gent at the Federal eserveBank of San Francisco."

The te leram also authorized the taient to have prepared by counsel forthe

Federal reserve bank, and to issue to the Old National Corporation

liraited voting permit in accordance with the telegram.

Approved.

In connection with the above there was presented a second tele-gr

dated

Reviton,

'1*114cisco,

11

v"tment and Securities Co.", Spokane, Washington, for a voting per-

February 3, 1934, approved by five members of the Board, to

Federal Reserve Agent at the Federal Reserve Bank of San

Stati5 that the Board has considered the application of the

Under authority of section 5144 of the Revised Statutes of the

',kited States, as amended, entitling such organization to vote the

atock which ti owns or controls in "Me First 1:ationa1 Trust an Savinrs

13'81.1k SPokane", Spokane, ,ashington, and has authorized the issuanceor a

talited permit to the applicant, subject to the following condition:

4u bere"Simultaneously with the issuance of the limited votinf2 permit

Po.Y authorized there shall be issued to Old National Corporation,Qk

to,2.1:1e, Washington, the limited voting permit authorized in the(111aTs telegram to you of this date."

ror the following purposes:

To act upon a proposal or proposals to reduce the commonal stock of such bank from 0500,000 to ;;250,000 pursuant to a

WhiCh which shall be approved by the Comptroller of the Currency and3hall provide, among other things, that the funds released by

th-- :reduction in common capital stock, toether with a portion ofIA: bank's undivided profits, shall be used to charge off or other-

eliminate approximately ,T277,000 of undesirable assets and of"I'reciation in securities.


1.-.7C")

2/5/34

"2. To act upon a proposal or proposals to authorize thecreation and issuance of common and/or preferred stock of such bankin such amount and in accordance with such plan or plans as shall beaPproved by the Comptroller of the Currency and shall be satisfactoryto the Federal Reserve Agent at the Federal Reserve Bank of SanFrancisco."

The telegram also authorized the agent to have Tirenared by counsel for the

Pederal reserve bank, and to issue to the Investment and Securities Co.

liraited votinc permit in accordaace with the telegram.

Approved, together with a letter datedFebruary 3, 1034, approved by five membersof the Board, to Lr. .'Connor, Comptrollerof the Currency, reading as follows:

"In accordance with your recommendation, the Federal ReserveB?ard approves a reduction in the common capital stock of 'The-2,t1rst National Trust and 3avinL;s Bank of 3pokanet, L;pokane, ':;ashing-

frora , 500,000 to .250,000, pursuant to a plan which provides?ilat the bank's capital shall be increased by the sale at par of250,000 par value preferred stock to the Reconstruction Finance0rporation, and tht the funds released by the reduction in common

?aPital stock, together with a portion of the bank's undivided prof-shall be used to eliminate approximately 7.;277,000 of substandard

ussets and securities depreciation, all as set forth in your letterof January 20, 1934."

Letter to the President of the United States reading as follows:

"As you are aware, Section 10(b) of the Federal Reserve Actauth orizes any Federal reserve bank in exceptional and exigentfirumc stances to make advances to its member banks on time or demandrtes secured to the satisfaction of such Federal reserve bank when!II,ch member banks are without sufficient eligible and acceptable:;?ets to enable them to obtain adequate credit accomodations throwhfl," methods provided in the Federal Reserve Act. This section was'aZed to the Federal Reserve Act by the Act of February 27, 1932,

3, las originally enacted authorized such advances only until March

3, The section was amended, however, by the Act of February

Act.'933, so as to extend such time until March 3, 1934; and by thetai,of March 9, 1933, Congress again amended this section in cer-

taa ":44 respects and included a provision that 'no advance shall be

orc'e uader this section after March 3, 1934, or after the expiration

lana euch additional neriod not exceeding year as the 1-'resident,r Prescribe'."The existence of the authority conferred by Section 10(b) of

-e Federal deserve Act has made it possible for the Federal reserve


2/5/34-9-

"banks to extend to a considerable number of member banks creditwhich was urgently needed to tide them over a difficult period andin some instances to prevent suspension. Up to December 31, 1932,"ances aggregating :',!,28,965,000 had been made under the authority.r this section and during the year 1933 advances aggregating'3265,463,000 were made under this authority. These advances have?een. Made to member banks located in all rederal reserve districts.ua Lecamber 31, 1933, advances of this kind in the amount of,18,824,000 were outstanding.

"In this connection it may be stated that the Governors ofthe Federal reserve banks considered this subject at a conference

din October, 1933, and recommended that the provisions ofdeotion 10(b) of the Federal Iieserve Act be extended for one yearUnder the discretionary powers granted to the ?resident by the law...S.T hould the authority contained in this section be not extended, the-,sderal reserve banks will be unable after I..arch 3, 1934, to grantcredit accommodations to individual member banks which may haveexhausted their assets that are eligible and acceptable to obtainadequate credit accommodations from the reserve banks by thecustomary

methods."In the circumstances the Federal -1.-leserve Board feels that

lt is important that the authority of the Federal reserve banks60 Make advances to their member banks under the provisions of thissection of the law should be continued and, accordingly, respect-fullY recommends that, pursuant to the authority conferred uponY°u bY ‘ection 10(b) of the Federal 1.eserve Act, you prescribe an!dditional period of one year after Larch 3, 1934, during whichFed raesle.jiecre banks may make advances under the provisions of

"For consideration in the event that you should determine toks such action, a draft of a proclamation extending the authority

cr the Federal reserve banks in this respect for the period recom-aded has been prepared and transmitted to the Director of the

151areau of the Budget, accompanied by this letter, in accordancewith the terms of the Executive Order of August 10, 1933."

Approved, together with a letter to

Honorable Lewis W. Douglas, Director ofthe Bureau of the Budget, reading as fol-lows:

dent"There is inclosed herewith a letter addressed to the Presi-

hi u recommendirv; that, pursuant to the authority conferred uponbY Section 10(b) of the Federal Reserve Act, he prescribe an

1:e4uitlonal period of one year after Earch 3, 1934, during which

that a]. reserve banks may make advzInces under the provisions of

til'at section, together with a draft of a proclamation extending

authority of the Federal rese2ve banks in this respect forhe period recomended.


k 2/5/34-10--

"The draft of this proclamation is transmitted to you inaccordance with the terms of the Executive Order of August 10,1933, and it will be appreciated if you will expedite itsconsideration and transmission with he accompanying letter,through the channels prescribed in the Executive Order, to thePresident for his consideration.'


3111"cl, to Mr. F. Grady Huddleston, Secretary of the Tennessee Bankers

Usociation, Nashville, Tennessee, reading as follows:

"This refers to your letter of ainuary 12, 1934, in which you

System to be advised whether a member bank of the Federal .;,eserve

':)Irstem may lawfully issue a time certificate of deposit payableLa ninety days and bearing interest at the rate of 3 per cent per611111u:la. You suggest that if the interest so paid on such a certifi-?ate be added to the renewal of the certificate, the amount ofInterest ultimately paid would appear to exceed the maximum rate11°w allowed under the Federal deserve Board's Regulation

"Inasmuch, however, as an original certificate of deposit.a renewal certificate must be regarded as separate contracts,it is the view of the Federal Reserve Board that the payment of

interest at the rate of 3 per cent Per annum on a time certificatePayable at the expiration of ninety days or at the expiration ofEaY other period (not less than thirty days), whether such inter-est ls paid in cash at maturity or added to the renewal certificate,fes not constitute a violation of section III(c) of Regulationwill-eh provides that no member bank shall pay interest, accruingafter October 31, 1933, on any time deposit or any :art thereof at11 rate in excess of 3 per cent per annum, compounded semiannually.

is this connection, it should be noted that if such a certificatereissued, no interest may lawfully be paid for the period between

:f? ':ate of maturity of the original certificate and the date on"lch the renewal certificate is actually issued."

Approved.

Letter to hr. Curtiss, Federal Reserve :,.:;ent at the Federal Re-8e rire _

1)6J1k of Boston, reading as follows:

"Receipt is a&noviledged of your letter of January 13, 193'l,ta wh.you refer to the fact that in 7uly, 1931, a permit was

Zellted under the provisions of the Clayton .,ct to 1:r. Roger .Amory

aildserve as a director of the Rational Rockland Bank of Bostonas a director of The Kidder Peabody Trust Company of Boston.wYou state that in October, 1932, the name of The Kidder


455

2/5/34-11-

"Peabody Trust Company was changed, and that the institution is nowknown as the Union Trust Company. However, you state that you areinformed by one of the officers of the Trust Company that the suc-cession was simply a chance of name as permitted under I:assachusettslaws and that no new corporation was formed.

"You also state that on December 1, 1933, the Union Trust Com-PahY assumed the deposit liabilities of nnother trust company andPurchased some of its assets, but that the transaction did not involvenY chance in the corporate existence of the Union Trust Company otheran the acquisition of the additional assets and liabilities.

"Under the circumstances, you ask whether a new permit is neces-arY for Lr. ,mory. In accordance with the Board's letter of June 25,t93O (X-6041), you state that in your opinion there has been no changein the situation which would render it in the public interest to re-voke the permit issued to Er. Amory in 1931.

"In the event that you and the counsel for your bank are satis-led that there has been no chance in the corporate existence of TheUdder Peabody Trust Company since the permit was granted to Ur. :Inory,it appears that the permit heretofore isaued to Ur. .Lmory would nowIllthorize his service as a director of the Union Trust Company, forthe reasons stated in your letter, since, in that event, it wouldsceera that ir. Amory would be serving the same institutions as wereclvered by his permit, although the name of one of them has beenchanced."

Approved.

Letter to an applicant for a permit under the Clayton :et, advis-

illgal of his application as follows:

11T. Ce°rge Ohse, for permission to serve at the same time as aclalreotor of the Yorkville i;ational Bank, Yorkville, Illinois,

as a director of the Farmers L;tate Bank of Yorkville, York-ville, Illinojs.

Approved, together with a letter to‘3tevens, Federal Deserve Agent at the

Federal eserve Bank of Chicago, readingas follows:

co "There is being transmitted to you under separate cover a01,1317,0f the permit issued to 1.r. George Ohse under the provisions

Clayton -ct covering his service as director of the York-

villeITational Bank and of the Farmers Lltate Bank, both of York-

',,, ThIllinois.e permit is being issued because of the statement contained

cor4our report that while the banks involved are in substantial

43ctition, you feel that the influence of the applicant, who is


?7MT

2/5/34-12-

"the only officer or director serving both banks, 7,111 be helpfulin effectin2; a consolidation of the two institutions, which is muchneeded since the mall villase in which they are located can sup-port only one bank.

"In the event the proposed consolidation has not been effectedY truly 1, 1934, you should review the matter and submit a reportto the Board with your recammendation as to whether or not thePerait should be revoked."

Letters to applicants for permits under the Clayton Act, ad-

1314g of approval of their applications as follows:

n. W. Stanton, for permission to serve at the some time as adirector and officer of The Citizens National Bank (1, Trust Company5! Oneonta, Oneonta, New York, and as a director of the Firstliational Bank in Sidney, Sidney, New York.

14".Robl1n H. l'avis, for permission to serve at the same time as..director of the Denver branch, Federal Reserve Bank of Kansasie,ltY, Denver, Colorado, and as a director and officer of TheLenver Lational Bank, Denver, Colorado.

Approved,

There were then presented the following applications for ori,zinal

Or additional stock, or for the surrender of stock, of Federal reserve

bath:

A 14.1cations for ORIGINAL Stock:

tistrict No- 3'The First Nationvl Bank in Frackville,lera

Pennsylvania-4e County rational Bank at Clearfield,Clearfield, Pennsylvania

1,3,istrict 8.'iratAlt

amont,Bank in latamont,

Illinois iatrict No. 10.

First ITational Bank in

1-1-11aral Nebraska urora,

A 14for ADDITIONAL Stock:T-1;,7urict no. 1.

""4•011 Trust alswort

OompanY,ih, Lain°

Shares

87

324 411

36 36

36 36

Total

12

483

12


457

Shares

189690 204

24 24

93 93Total 321

V5/34

A 1;4.1cations for 3DDREITD.i71 of Stock:

District No. 7.Flrst

National Bank, Atwood, Illinois,First National Bank, Fairfield, Iowa,. .41sconsin National Bank, Watertown, Vasconsin

1.441L1112L251:_q-Plrat Nationi-hank, Huttig, Arkansas

aMb Bank &-Trust Company:Luling, Texas

-13-

Approved.

Thereupon the meeting adjourned.

kaie CAA-cR Secretary.


19340205_Minutes.pdf

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